Julia Hoggett, the chief of the London Stock Exchange, has blamed poor pay. In a blog post last year, she said efforts to attract the best and brightest to Britain were “hampered by the advice and analysis of the proxy agencies and some asset managers voting against executive pay policies”.
A survey of 150 directors at London-listed companies last year concluded that lower pay for City chiefs compared to rival financial centres was holding back the UK as a listing venue.
Chief executives of companies listed on the US S&P 500 make on average $10m (£8m) more than FTSE 100 counterparts, according to data from Equilar and Deloitte.
Corporate lawyers say they are fielding calls from US companies that are considering a UK push but are concerned about invoking the ire of UK investors and politicians. Some are asking their lawyers for advice on how to retain American-style salaries without causing anger.
Now, after a year of torrid headlines about London’s decline, City resistance to big pay deals is starting to soften.
In response, a number of FTSE 100 boards have started pitching US-style pay packages. They include medical devices maker Smith & Nephew, where chairman Rupert Soames – the new chief executive of business lobby group the CBI – has been pushing for a pay deal that better reflects the high salaries paid by US rivals.
It is not simply an opportunistic cash grab: Smith & Nephew’s former chief Namal Nawana quit because his pay did not match what he earned in the US.
While investor attitudes are shifting behind closed doors, shareholders are not keen to publicly wade into the debate.
Andrew Mason, head of active ownership at Abrdn, says simply that a “blanket approach to remuneration is not appropriate”, for instance. Compensation remains a sensitive subject in corporate Britain.
Mark Freebairn, head of board practice at headhunter Odgers Berndtson, blames public attitudes.
“It’s [considered] outrageous for a chief executive to earn £3m, but it’s absolutely fine if Marcus Rashford earns £350,000 a week,” he says.
“The Chancellor wants to get more UK pension money into equities. Quite rightly, we should be investing in our businesses: why would anyone else invest in our businesses if we’re not?
“But if we’re not going to look at globally competitive benchmarking, then we’re in a situation where someone in New York is getting four times [more]. If we’re not happy about that, then we’ve got to do something.”
